Navellier’s “Earth Movers and Cargo Gods”

Just a quick note on a few companies Navellier is teasing in an email I got over the weekend — the email is a speedy reaction to the Minnesota bridge collapse, which is a little ghoulish but certainly not something that Navellier is alone in doing. Lots of folks urging investments in infrastructure plays to profit on the decrepit bridges and roads in the developed world.

The “Earth Mover” company he’s talking about has done almost twice as well as Caterpillar this year, and it’s based in Europe — that’s it, those are the clues we get.

So … construction equipment company, in Europe, that at some recent point had roughly a 60% year to date gain on the books. Hmmm ….

There are a couple candidates that are of significant size: CNH Global (CNH), and Volvo (VOLV — the truck and heavy equipment company, not the Volvo cars division of Ford). Going off the only other clue, the almost 60% gain, is a little rough because Volvo’s chart has been wild lately — it did have a gain of well over 60% at one point but it’s a bit less than that now, following depressed earnings on the lower demand for heavy trucks in the US (though they said their Asian and European business was still OK).

CNH Global is a bit more of a highflier, and it is just a hair short of doubling year to date. It hasn’t had the earnings hiccup that Volvo had, and it looks quite a bit more expensive on the face of things — trailing PE is pretty steep, and it’s got just a tiny dividend. They’ve got a finance subsidiary, as well, and are more prominent in agricultural equipment, so maybe that’s why they’re doing a bit better.

So I’m guessing that Volvo is the answer to this one — it is (or was) owned by some Navellier mutual funds, it has a decent valuation, probably because their truck business gets much more attention than their heavy equipment business, and it has a nice yield. Other than that, I don’t know much about them.

The “Cargo Gods” he mentions in the same email are two airlines — a Chinese one and a Chilean one, and a cargo shipper (an air one, I presume) out of Bermuda.

The Chilean airline is noted, but no clues are given. Still, it really would have to be Lan Airlines (LFL) — that’s the only Chilean airline that international investors have been at all interested in, and it’s doing a nice job expanding across South America (and holding up a sight better than my favorite South American airline, GOL). LFL has been extraordinarily flat all Summer, but that followed a really nice gain over the last couple years.

The Chinese Airline, which he suggests we buy first, is up 70% in the last three months. That’s about the only clue we get, other than that they’re making money on cargo. And they’re traded in the US, if Navellier is still following his same guidelines and only picking ADRs of global stocks.

So that means that in all likelihood we’re talking about China Southern Airways (ZNH). If you go by their share price a few days ago, they have gained almost exactly 70% in the last three months off of a base price of $25 (now it’s up a bit more still, just over $45). They do have a significant cargo business, and clearly this is an investment for those who believe in growth — the trailing PE is well over 200. Personally, I like and own the stable and profitable Swire Pacific conglomerate, a significant owner of Cathay Pacific and, through Cathay, parts of Dragon Air and Air China, but I haven’t looked at ZNH in any detail (and as I noted above with Gol, I wouldn’t say that my history at picking airline stocks has been impeccable).

And one more — a shipper out of Bermuda, that reported earnings on Wednesday, August 8 or August 1 (what does “last Wednesday” mean, anyway?) that were so far above estimates as to be “laughable” and at one point was up about 16% based on those earnings. What could that be?

The only decent match I found was TBS International (TBSI), an ocean shipper in Bermuda, and they did report better than expected earnings this past Wednesday (the 8th) and did indeed have a nice jump that had them up 16% for the week at one point … they gave all those gains back almost immediately, however, and now the price is right back where we started. And they only beat estimates by about 3 or 4 percent, so it’s hard to call that “laughable.” Add that to the fact that this is a ship shipper, not an air shipper, and it seems a bit of a stretch (though perhaps I’m reading too much into the email).

Atlas Air Worldwide (AAWW) is more the kind of company I was expecting here — they reported earnings the same day and are involved in air cargo, though they primarily lease crewed planes, and they did have blowout earnings numbers due in part to an asset sale. But their shares are actually down on the week, so that seems like it doesn’t match so well, either.

So for now, I give up — I’ll leave this one out there for the Gumshoe faithful — trade you two airlines for this Bermuda cargo company?

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